Palm oil, processed from the fruit of the oil palm tree, has been in the news for all the wrong reasons. The fact that this vegetable oil is an ingredient in so many different products in the world, has unfortunately led to the mismanagement of natural resources to establish more plantations for commercial production.
“Usually when people in Europe or America think of palm oil, it is synonymous with deforestation and the destruction of animal habitats, or land grabbing. And yes, that is all factual. It is something many large multinational companies are guilty of and are now trying to change. However, this popular narrative does not take into account the realities of smallholder farmers in West Africa,” says Mahmud Johnson of J-Palm Liberia.
J-Palm is an agribusiness company founded by Johnson in Liberia in June 2013. The business supports smallholder farmers who harvest the fruits from naturally growing oil palms in their communities for oil production, purchasing both the palm oil as well as the kernels left over as a by-product. It then processes the kernels into palm kernel oil for its range of consumer lifestyle products – soaps, moisturisers and hair conditioners – under the brand Kernel Fresh. It also aggregates the crude palm oil purchased from the smallholder farmers to sell on to retailers.
“In most countries in West Africa, the oil palm is indigenous and grows naturally in the wild. The farming of the fruit and processing it into palm oil avoids the ills found elsewhere in the industry like deforestation and environmental challenges,” explains Johnson.
Johnson, who grew up in Liberia, had the idea for J-Palm during a Christmas break when he was back home from studying in the US. He had a conversation with his aunt who had made a living out of being the middleman who travels to rural areas to buy oil from the smallholder farmers to sell to traders in the city.
“She revealed how her business went under because too often she would travel to the rural areas, incurring the transportation expense, only to find the farmers did not have enough palm oil to supply. It did not make sense to me. With a country so rich in oil palm trees, how could there be a shortage of supply?
“That is where the kernel for the palm oil business was planted, no pun intended,” says Johnson. One year later, within a week of graduating from college, he registered the company with no business background or work experience. “I felt so strongly about it and thought, let’s give it a shot.”
Research and finding the equipment
In that last year of college, Johnson kept busy with desktop and market research to fine-tune his idea.
“I came across a study commissioned by USAID that showed 35% of all palm fruit in Liberia remains on the trees where it rots each year owing to production inefficiency. Of the 65% that is harvested, farmers lose half of the expected yield because extracting the oil by hand is just not as efficient as doing it by a machine.”
He decided to dig deeper and teamed up with a friend back in Liberia to conduct market research. After talking to more than 100 retailers from the urban markets, it was clear: the pain point was on the supply side. More than 50% of the retailers indicated they would run out of stock at least once a week. The demand was there but they were not getting oil from the smallholder farmers fast enough.
The fledgling J-Palm team heard about USAID’s smallholder oil palm support project which was busy with technology transfer in Liberia, teaching local blacksmiths to make rudimentary but effective mini oil palm mills for areas with no electricity. Johnson realised these mills could be the answer as they were easy to operate.
“That is where it clicked for me,” says Johnson. The company could boost productivity on the supply side, purchase from the farmers and aggregate, then trade with the retailers. Using its own transport, J-Palm would be able to lower the expense of acquiring the oil and still sell at a price point that made sense for all parties.
Initial scepticism and obstacles
It was, however, not an easy start. “We registered the company in June 2013 but the first oil for J-Palm was produced only in January 2014. It might seem like a no-brainer now but there was a lot of scepticism from the smallholder farmers,” he recalls. “There I was, this young guy, telling them I could improve their yields. They simply did not believe me.”
Then, one day, the first village agreed. The mills were installed and, once the result was clear – that it could cut the time spent processing by 90% while boosting production of oil by 50% – the other villages soon followed suit. Today, J-Palm is active in eight communities.
A few months down the line, Johnson was on a routine visit to one of the processing facilities when he saw a plume of smoke. “I was told they were burning the palm kernels, the part that remains after extracting the crude oil,” he says.
“Our research had shown a tremendous demand for palm kernel oil but almost 200,000 tonnes of palm kernels was going to waste in Liberia every year; either burnt or thrown in the river.” J-Palm immediately started buying and processing the kernels and sold the oil in bulk to soap makers.
Things were progressing nicely when the first case of Ebola was recorded in Lofa County in March 2014. J-Palm was forced to shut its operations and could resume only more than a year later.
When the side business became the main business
Once it got underway in 2015, J-Palm focused more on the processing of the kernels. By November 2016, the first Kernel Fresh product was launched.
“Our first product was just the pure palm kernel oil. We put the crude oil in little bottles with a label and distributed it to a few supermarkets. People shared stories about the results of using the oil and the business soon grew,” Johnson says.
Having used the palm kernel oil on his skin after suffering an acne breakout, Johnson wondered if it could be effective in treating skin conditions. He attended a youth conference where he met a man suffering from serious acne and offered the oil as a treatment. J-Palm documented the progress over time and, within three months, the man’s skin was clear.
“We made a video and posted it on Facebook. It went viral. A few months later, I got a message from a woman on Facebook who had the same results. We invited her to our office and made a video of the interview. That also went viral,” he adds.
Suddenly retailers, who did not want to stock Kernel Fresh prior to the videos, were calling J-Palm to ask for the product.
The success, however, had a challenging side effect: consumers began to view the product as medicinal, only to be used for skin problems. Sales dropped with very few repeat customers.
“We made a strategic decision to position Kernel Fresh as a lifestyle product. A healthy, natural product that is good for you and should be used continuously, not just when you have problem skin.”
Kernel Fresh’s product portfolio currently stands at over 30 products with 160 unique stock-keeping units.
“What was supposed to be the side business, became the main business,” says Johnson.
Expansion into new communities and targeting export markets
In 2019, J-Palm partnered with Pacha Soap in the US, a company that produces a range of soaps and body products from ethically sourced materials. Together, the two companies successfully applied for a United States African Development Foundation grant, that will now be employed to help J-Palm expand its operations to 20 communities.
“In each village, we will build a small processing site with three machines. We will be creating jobs, hiring people from the communities as our co-ordinators and production assistants. Then we will aggregate from those sites and bring the product to our facility for further processing.”
With the help of Pacha’s blockchain technology, which is tracking the supply chain of the oil, the company is hoping to get organic certification for the palm oil production of each of the 20 communities.
Pacha will take some of the oil for its products and J-Palm has signed up a distributor in Europe for another portion of the supply.
“Along with the grant we received, we also have an offer on the table from an equity investor who would like to fund equipment to push up production even further by expanding the sourcing to over 150 communities. At such a high production capacity, we won’t have enough demand unless we focus on exports and the pricing is a lot better for exported organic products,” Johnson explains about the growth strategy.
“It’s a pretty exciting time for the company.”
J-Palm Liberia CEO Mahmud Johnson’s contact information
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